The acquisition expands the SPS Commerce retail community.

SPS Commerce, Inc., a leader in retail cloud services, recently announced to acquire CovalentWorks, a provider of cloud-based EDI solutions to approximately 2,000 small and medium-sized businesses.

Archie Black, President and CEO, SPS Commerce, said, “We are pleased to welcome CovalentWorks’ employees and customers to the SPS Commerce community.” Moreover, he added, “With the addition of CovalentWorks’ customers, this acquisition further extends the power of our retail community.”

Steve Brewer, CEO, CovalentWorks, stated, “SPS Commerce shares our vision of helping trading partners work better together through people, process and innovative technology solutions.” He added, “We are excited to empower our customers with the opportunities that SPS Commerce and its network can offer.”

Reportedly, as part of the SPS Commerce community, CovalentWorks customers will have access to the industry’s broadest retail trading network, leading ERP, e-commerce and logistics applications, global supply chain partners, and opportunities to enhance supply chain efficiency.

Insights into the acquisition

According to the terms of the acquisition agreement, SPS Commerce acquired substantially all of the assets of CovalentWorks for approximately $20 million in cash and $3 million in stock.

SPS Commerce anticipates the acquisition will have a nominal impact to the fourth quarter and full year 2018 expected financial results.

For the fiscal year 2019, the company expects the acquisition will add approximately $4.5 million in revenue and approximately $1 million in Adjusted EBITDA. The company anticipates the acquisition to contribute approximately $100,000 per quarter to Adjusted EBITDA in the first half of 2019, and approximately $400,000 per quarter in the second half of 2019.

Furthermore, SPS also expects the acquisition to contribute approximately $2 million to Adjusted EBITDA in the fiscal year 2020. Additional details, including the amortization expense associated with the acquisition, will be provided when the company reports fourth quarter and fiscal 2018 results in February of 2019.

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